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Topic 5 : Job-order Costing - Coggle Diagram
Topic 5 : Job-order Costing
Types of product Costing Systems
Process Costing
produces many units of a single product
indistinguishable
assigning the same average cost per unit
Job-order Costing
Many different products are produced each period
manufactured to order
requires tracing or allocating costs to each job, and maintaining cost records for each job.
Similarities
systems assign material, labor and overhead costs to products for computing unit product cost
use the same manufacturing accounts (Manufacturing Overhead, Raw Materials, Work in Process, Finished Goods)
flow of costs through the manufacturing accounts is the same
Differences
production
Process: Single product
job-order: Many different jobs
Cost accumulation
Process: Department - department production reports
Job-order: individual jobs - job cost sheets
Unit cost
Process: department
Job-order: job
Allocation Base
Manufacturing Overhead, including indirect materials and indirect labor, are allocated to jobs rather than directly traced to each job
impossible or difficult to trace overhead costs
Manufacturing overhead consists of many different items
manufacturing overhead costs are fixed even though output fluctuates
Predetermined Overhead Rate (POR)
Estimated total manufacturing overhead cost / estimated total units
Actual overhead for the period is not known until the end of the period
Overhead applied = POR x Actual Activity
Document Flow Summary
Materials Requistion
Direct
Job Cost Sheets
Indirect
Manufacturing Overhead Account
Employee Time Ticket
Direct
Job Cost Sheet
Indirect
Manufacturing Overhead Account
Manufacturing Overhead Account
Indirect Material + Indirect Labour + Other Actual Overhead Charges
Applied Overhead
Job Cost Sheets
Disposition of Under or Overapplied Overhead
Work in Process, COGS , Finished Goods
divided by percentage
COGS